Skip to main content
//empty //empty

The green economy encompasses everything from wind power and hybrid cars to the promotion of reusable shopping bags.

Fernando Morales/The Globe and Mail

Globe editors have posted this research report with permission of TD Economics. This should not be construed as an endorsement of the report's recommendations. For more on The Globe's disclaimers please read here. The following is excerpted from the report:

Green bonds are a debt instrument issued to raise capital that is used exclusively to support projects with specific environmental benefits. They help raise funds for environmental initiatives at a time when governments are strapped for cash. The first green bond that directed the use of proceeds was issued just six years ago. As a result, it is a relatively new financial instrument and has yet to conform to a standardized format.

Institutional investors are the most natural client-base for green bonds. These investors hold 72 per cent of long-term investment in the world's $95-trillion (U.S.) bond market and have demonstrated demand for environmental investment products. However, individuals are becoming increasingly exposed to green bonds, directly through portfolio diversification and indirectly through mutual funds.

Story continues below advertisement

Lack of a standardized format makes estimating the size of the green bond market difficult. Market characteristics vary based on how the instrument is defined, with current estimates placing the value of the market between $10-billion and $346-billion. However all estimates indicate that the demand for green bonds is significant and has been growing rapidly over the past six years

Green bonds are a good way to secure large amounts of capital to support many different environmental investments. However, they are not ideal for all types of projects, specifically high-risk ventures.

The outlook for green bonds is very promising, but they are still subject to the same valuation analysis as any other debt instrument. In order for green bonds to attain mainstream success, their structure, rate of return and risk profile must be similar to traditional bonds.

Read the full report here.

Read other research reports here.

Report an error Editorial code of conduct
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

Comments that violate our community guidelines will be removed.

Read our community guidelines here

Discussion loading ...

To view this site properly, enable cookies in your browser. Read our privacy policy to learn more.
How to enable cookies